Australia’s green hydrogen ambitions and efforts to gain a foothold in the global solar and battery supply chains have been put on the back-burner by the federal Labor government, following a series of funding cuts and redirections in the 2026-27 federal budget.
Federal treasurer Jim Chalmers unveiled Tuesday night his government’s budget for the next financial year, targeting working Australians, fuel security, cost of living, housing, and increasing taxes on investors.
While much of the focus was on fuel security, given the global impact of America and Israel’s war on Iran, there were a few announcements regarding Australia’s electric transition, including promised changes to the government’s electric car discount and funding for more kerbside charging.
But hidden deep in the budget papers was the government’s announcement that it will achieve savings of $2.2 billion over the next 14 years by redirecting funding from the department of climate change, energy, the environment, and water (DCCEEW).
Key amongst the line items that will deliver most of these savings is the reduction in uncommitted funding under Australia’s Battery Breakthrough Initiative and Solar Sunshot programs and reducing funding available for the second round of the Hydrogen Headstart program.
The Battery Breakthrough Initiative and Solar Sunshot were both part of the Future Made in Australia (FMA) policy agenda, providing funding towards building battery and solar PV manufacturing supply chains across Australia.
Similarly, $1 billion will be trimmed off the second round of funding for the Hydrogen Headstart program, which will now only have $1 billion to fund large-scale hydrogen production projects.
The first round of the Hydrogen Headstart program awarded $1.2 billion in funding split between two projects, though six projects were originally shortlisted.
Copenhagen Infrastructure Partners’ 1,500 megawatt (MW) Murchison Green Hydrogen Project secured $814 million, while Orica’s 50 MW Hunter Valley Hydrogen Hub secured a further $432 million.
The second round was officially launched in October with a focus on difficult-to-decarbonise sectors and a focus bringing down production costs.
Thomas Nann, the CEO and co-founder of Newcastle-based energy storage company Allegro Energy, likened the cuts to “cancelling the gym membership because you haven’t lost weight yet.”
“A few thoughts from someone who runs a battery company and was, briefly, a Future Made in Australia (now more likely a Future Made Somewhere Else),” Nann said in an open letter to the prime minister and treasurer.
“You’ve pulled $1.3 billion out of hydrogen, solar and battery programs because industry uptake was slower than hoped.
“Meanwhile fossil fuel subsidies hit $16.3 billion this year, up 9.4%. That’s faster than the NDIS. It’s also faster than the renewable hydrogen industry you just defunded for growing too slowly. The Fuel Tax Credit Scheme alone is $10.8 billion – about eight times what you took off clean energy.
“Australia has the sun, the wind, the minerals and the engineers. We’re losing the race because other governments turn up and support their clean tech industry. You don’t have to. But it would be nice.”
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